Green firms to get long-term deals

Green energy firms are to be handed long-term contracts to supply the Government in a bid to kick-start investment, it has been revealed.

Ministers will guarantee to take a set proportion of power from producers for up to 25 years.

Apart from making the generators a more attractive proposition for investors, it is hoped the move will encourage competition in the wider energy market and save taxpayers tens of millions of pounds.

The Government Procurement Service (GPS) is the biggest power customer in the country, spending around £1.5 billion a year on gas and electricity.

Under the Energy for Growth pilot scheme, 2% of those needs - £25 million - are to be met directly from renewables generators, rather than bought on the wholesale market.

If the trial is successful that proportion could be extended to 50% over the next five years. The scheme will initially focus on constant power sources such as biomass and energy from waste.

Officials say more than 150 green energy projects are currently stalled, many for lack of finance.

Cabinet Office minister Francis Maude said he wanted to use the Government's "clout" to "shape the market for the good of the country".

"The UK is in a global race and that's why we are working to attract investment into our energy industry to create jobs, develop technology and secure clean and diverse supplies for the future," he said. "This pilot will take us a step further towards our goal of hedging more of our energy needs against future price fluctuations - protecting the taxpayer.

"And because we will be increasing competition in the energy market there could be a downward pressure on everyone's bills as well."